KOLKATA (miningweekly.com) - The Indian government will be ready to start the auction of coal blocks to standalone domestic and foreign miners by June this year, an official in the Ministry of Coal said.

The process of identifying suitable coal blocks had already begun and rules for allocating these through auction would be completed within the next two months, while invitation for bids would be floated by June, once the ongoing first round of auctions of 101 blocks for captive mining were over, the official said.

The Ministry of Coal and producer Coal India Limited had already held informal talks with domestic and foreign standalone mining companies, including BHP Billiton and Rio Tinto, which were keen to enter the commercial coal-mining sector opened up for private companies, he added.

The legislative framework was already in place and administrative rules were being worked out to enable standalone mining companies to enter the coal sector without any restriction on sale of coal from such projects, the official said, pointing out that ongoing auctions of coal blocks were exclusively for captive mining by companies operating in thermal power, steel and cement sectors.

However, in the case of foreign mining companies, the only restrictions would for the entity to be mandatorily registered in India, before the miner was considered eligible for putting in bids for coal blocks at the auction, he said.

According to the Ministry, several foreign mining companies interacting with the government had observed that commitment to investing in the Indian coal sector would be dependent on further clarity on the legislative environment and investors would wait until such time, enabling provisions for opening up of the coal sector to be legislated and passed by the Indian Parliament.

Currently, the coal sector reform was driven by the Coal Mines Special Provisions Ordinance; however, this would have to be ratified by the Parliament and doubts persisted as to whether the incumbent government would be able to muster the majority to do so.

At the other end, the Ministry and a specially appointed committee had initiated parleys with trade unions operating in the coal industry seeking to get around workers’ opposition to opening up coal mining to private investors.

All national trade unions have opposed commercial mining of coal by private companies alleging it is a violation of the Coal Nationalization Act, which put coal mining under the exclusive domain of the government.

Officials said that by June, the government would have completed auction of 101 coal blocks of the 204 blocks mining licences which were cancelled by the Supreme Court last year. These auctions were exclusively for captive mining by user industries.